NICEP: Economy grows but time to walk the austerity walk

Posted on Wednesday 26 November 2014 byUlster Business

Pictured at the launch of the NICEP Autumn Outlook 2014 report at the First Trust Bank business briefing held in the MAC, Belfast are (l-r) Colin Walsh, Chair, CBI; Jim Fitzpatrick; Des Moore, Head of First Trust Bank and Gareth Hetherington, Associate Director, NICEP.

The Northern Ireland economy is expanding but impending austerity cuts by government will temper growth in the future, according to the latest report from the Northern Ireland Centre for Economic Policy (NICEP).

Its economic briefing said that 14 out of the 19 sectors in the economy here are growing with the industrial and services sectors helping to reduce overall unemployment.

“The headline economic data for Northern Ireland remains positive,” the report said. “Employment is growing, unemployment is falling and business surveys all report high levels of confidence and growing order books.”

And it expects the economy to grow by 2.2% this year, 1.9% next year and 1.3% in 2016, a gradual slowing as government spending cuts begin to bite.

Gareth Hetherington, Associate Director at the First Trust-backed NICEP, said Northern Ireland, and other devolved administrations, have been relatively sheltered from cuts up until now.

“We’ve been talking the talk when it comes to austerity but we’ve yet to walk the walk,” he said at the report’s launch in The MAC theatre in Belfast.

The NICEP report said Stormont should learn from the experience of the Republic over the last few years when it comes to implementing cuts.

“One impact of the imminent budget squeeze will be the need to prioritise expenditure, but making hard choices that limits damage to the economy will be very challenging,” it said. “In this regard Northern Ireland Government Departments could seek insights from their counterparts in the Republic of Ireland who have almost completed their own austerity journey.”

NICEP expects house prices to grow by 6.9% this year, 6.1% in 2015 and 6.0% in 2016, by which time it expects base interest rates to reach 3%.